I am pleased to catalogue a new entry to the vast repository of Questions to Which I Do Not Know The Answer. (Can you even imagine the size of this notional facility? Clearly, it would dwarf that warehouse at the end of Raiders of the Lost Ark where the US government stash the Ark of the Covenant.) The question is: why does the UK have the longest tax code in the world? The Hong Kong tax code, widely held by tax lawyers to be the most admirably efficient in the world, is 276 pages long. The British tax code, rapidly beginning to look like the most disingenuous in the world, is currently in excess of 17,000 pages. It has more than trebled in size since 1997.
The sun may now set on our empire, and we may lose at all the sports we invented, but you know what? We can crap out tax code like no other nation on Earth. It’s probably why so many nice rich companies and foreign gazillionaires want to come and do business here.
But that’s just a guess – and in the interests of answering my question with a little more authority, I decided to ask wiser people: why is our tax code so extravagantly long, complex and inaccessible? I put this question to lawyers, academics, accountants, and general brains. A couple of tax lawyers eventually told me that a 276-page tax code could generate the same if not more revenue in the UK, but otherwise I’ve been genuinely surprised to find that no one seemed keen or able to offer a definitive answer.
Well, not strictly no one. Unfortunately, the only people to furnish me with a clear-cut answer were the two (massively rich) people I spoke to, who were perfectly happy to tell me they legally avoid tax by any means possible. And – whaddya know – both of them gave me exactly the same reply: namely, that the tax code can only be that long and obfuscatory because the authorities want people like them to play it.
Obviously, I opened my mouth to tell them not to be so absolutely ridiculous, and that governments don’t want people to avoid tax. But I was suddenly reminded of that bit in The Godfather where Michael Corleone tells Kay that working for his father is just the same as working for any other powerful man like a senator or a president, and an exasperated Kay asks: “You know how naive you sound? Senators and presidents don’t have men killed!” And Michael just fixes her with that look, and says: “Now who’s being naive, Kay?”
So I do not claim to have carried out a remotely scientific study into the attitudes of serious tax avoiders. But I suspect their non-naivety about what governments – successive governments, by the way – secretly think about taxing the rich is not limited to my sample of two.
It certainly sounds like the sort of justification that might emanate from the aptly named Lord Fink, the former Tory treasurer and donor who on Wednesday was threatening to sue Ed Miliband for suggesting he’d avoided tax, and by Thursday was clarifying: “I didn’t object to his use of the word ‘tax avoidance’. Because you are right: tax avoidance, everyone does it.”
It turns out there are different types of tax avoidance, you see, and Lord Fink does the good kind. Or rather, the kind he described as “at the vanilla, bland end of the spectrum”.
We must congratulate his lordship on that use of “vanilla”, as though he’s talking about missionary-position sex or a Coldplay album. What his almost hilarious reply does remind us of, though, is that there are two types of tax avoidance, just like that Brass Eye segment about the two types of Aids – good Aids (suffered by recipients of infected blood transfusions), and bad Aids (gays).
So there’s the bad kind of tax avoidance – other people’s kind of tax avoidance, basically – which deprives the exchequer of money it could spend on schools or hospitals. And then there’s the good kind, the vanilla kind, which I imagine only denies the government funds it would spend on stuff like misjudged wars, and nuclear weapons we wouldn’t even be allowed to use unless the Americans told us to. You’ve heard of hypothecated tax – think of this as hypothecated tax avoidance. And as Lord Fink explains, “everyone does it”.
Do they, incidentally? As it goes, I don’t. (Yes, yes – the only reason I don’t wear a halo in my byline picture is because it’s at the polisher’s.) But there does seem to be a delusion nursed by major tax avoiders, namely that there’s an absolute equivalence between the activities of Amazon, say, and those who pay a plumber £100 in notes. Still, what do you expect of a society whose priorities are so self-loathingly out of whack that there are 300 HMRC employees investigating tax evasion of over £70bn, and 3,250 Department of Work and Pensions bods chasing down £1.2bn of benefit fraud.
As for the chances of this out-of-whackery being fixed, they would appear smaller than a rich man’s tax bill, given the choice of senior personnel. How to describe this week’s prime minister’s questions, other than as a two-bath event? The spectacle of both Ed Miliband and David Cameron attempting to make tax-dodging the other one’s fault was so sensationally petty that it had the feel of a Real Housewives of Westminster catfight.
I do hope none of the main parties spends more than 27p of their precious fighting funds on research into why people are turned off politics, because it’s in large part down to displays like this: two shouty career politicians contriving to take an absolutely vital issue and turn it into some juvenile local turf war. The electorate may consider themselves ripped off twice.
Both sides are, I’m afraid, all in it together. Only the naive would suggest Mr Cameron isn’t far more relaxed about tax avoidance than he makes out, or that half his social set isn’t at it. But Mr Miliband may care to consider the fact that the UK tax code doubled in size, then continued to expand, all under his former boss, Gordon Brown. It functioned as a dog-whistle to the very rich. By design? They certainly think so. As one of my tax avoiders has put it: don’t tell me a guy that clever didn’t know exactly what he was doing.